The New Arthurian Economics

Saturday, October 29, 2011

After getting my ducks all in a row, or all in a column actually, I made a graph of the CPI-U numbers:

Graph #1

Not very inspiring. That's okay. The exercise is its own reward.

The point of the exercise, though, was to look at prices during the Great Depression. Going back a few days, I had quoted a Futurecast post:

The 8% price inflation that afflicted the Depression-ravaged economy through the first six months of 1937 after four years of New Deal monetary inflation occurred despite unemployment rates in excess of 14%.

And Jazz said

bullshit

so naturally I had to look. But it's hard to see the Great Depression from here. So I looked at a smaller chunk of the CPI:

Graph #2

Starts out at 10. Was 100 sometime around 1983. Where is it now? Around 225 by the first graph. So prices went up ten-fold between 1913 and 1983, and have roughly doubled since. A little more than doubled.

Tenfold in 70 years. Doubled in say 23 years. For what that's worth.

23 once: doubled.
23 twice: Four-fold in 46 years.
23 three times: Eight-fold in 69 years, call it 70.

So we have done a little better since 1983, an eight-times increase as opposed to a ten-times increase in prices, based on ballpark numbers and 70-year trends.

Not really very good at all, is it?

Anyway, the Federal Reserve is gonna be 100 years old pretty soon, and I think you should be nice to it. I do. Yeah, they can do better, but only if they know how.

Meanwhile, the Great Depression. No no, not this one. The other one, 1929. Here's inflation for 1913-1945 again, this time show as a rate rather than a level: percent change from year-ago numbers:

Starts at 1914 actually, seeing the change from 1913.

Well, I don't see any 8% inflation rate in any month of the Great Depression. Five percent max, and that only briefly. Jazz was right.